The global pandemic became a linchpin for many health-tech startup companies that were struggling to find their purpose. In 2020, the industry saw record funding and attention – and the need to balance investor’s expectations with public health concerns.
In April 2019, the World Health Organization (WHO) released a draft global strategy on digital health that turned out to be a portent. The draft envisaged personalized digital health solutions as opposed to the “one size fits all” drug development model as a means to prevent, detect and respond to epidemics and pandemics.
The world of digital health technologies was, until very recently, a fragmented and hyper-specialized market — with customized antiviral medicines, biomarker identification for wellness and health monitoring devices, machine learning algorithms predicting health risks and so on. The Covid-19 crisis showed where interweaving was possible and even necessary, with the result creating a more coherent tapestry of technologies.
In doing so, the health-tech response to the pandemic has not only set important precedents for the way digital health technologies operate; it has also shown the world another instance of how technology can be a vital aid toward a common global goal.
A break from big pharma
There are parallels to be drawn to the events that unfolded during the financial crisis in 2008 that could be relevant to what we see happening in health tech today.
The collapse of Wall Street financial services firm Lehman Brothers in September 2008 led to the dismantling of big investment banks and paved the way for the emergence of financial technology. Some argue that the financial crisis became the impetus for the development of fintechs, which work with and are proponents of tools including blockchain, mobile banking and digital authentication to bring more transparency and accountability into banking.
“Startups that are nimble and better equipped to change can outrun bigger companies,” says Boris Lipchin, CEO and co-founder of Massachusetts-based Brio Systems. “When you see a rapid change take place, where everyone is new to the situation, startups are able to adjust to the changes better.”
Lipchin’s three-year-old startup began by offering preventive and predictive healthcare using blood tests to identify crucial biomarkers, including levels of cholesterol, hemoglobin (a protein in the red blood cells that carries oxygen to your body's organs and tissues) and C-reactive protein (a protein made by the liver that is a marker for inflammation). The company’s strategy was to train fitness instructors to run these non-invasive blood tests for users at gyms.
Industrial Revolution of health-tech startups
At the time of its founding in 2017, Lipchin wasn’t sure his company had what it needed to rise to an opportunity when it arose. He certainly didn’t imagine that his startup was waiting for a pandemic to become relevant, even indispensable.
In early March this year, Lipchin announced to his team that their mission had changed: Instead of using its testing platform for chronic disease biomarkers, as they were doing, Brio Systems would now help workplaces organize on-site coronavirus testing for their employees, particularly in the manufacturing sector that relied on “essential workers,” where companies had to think proactively about outbreaks.
“I don’t think we had product-market fit before this [Covid-19 pandemic]. It put a spotlight on the diagnostic lab industry,” Lipchin said. The pandemic shed light on a lot of things people took for granted, he said. Especially with regard to the to the diagnostic lab experience, the startups that paid attention to that experience became more valuable, Lipchin said.
Lipchin describes the pandemic as the industrial revolution for the diagnostic laboratory industry. But the analogy works for the broader field of digital technologies too.
The 2019 WHO draft digital health strategy, for instance, stresses the importance of promoting health innovations and emphasizes appropriate use of digital technologies, such as the use of artificial intelligence, blockchain and big data analytics, and other emerging techniques and solutions in the health sector. A majority of this transformative work is being carried out at smaller firms and startups that will be the future of healthcare.
Examples include the Canadian company BlueDot, which was among the first to detect the patterns of the coronavirus’ spread using algorithms that process data from news sites, flight records and climate information. And there’s the American startup Biobot Analytics, which directed its wastewater epidemiology research to predict outbreaks by testing sewage water across the United States. Another pacesetter, the Indian startup Qure.ai, helped with pandemic response by deploying a Covid-19 progression-monitoring tool and a healthcare platform, where users could check symptoms and find the latest health bulletin and safety precautions.
For technologies like that, the pandemic provided a mission and clarified the value of the tool. For other tech firms that were already hard at work trying to keep infectious diseases at bay, it was the moment of truth.
Life sciences company Rubix LS, which builds predictive models to combat rare and infectious diseases, is a case in point. The four-year-old startup's research helps ensure diversity in patients who sign up for clinical trials for drugs targeting such diseases. Rubix’s work with the United Nations and the WHO in tackling Ebola outbreaks in Africa and Leishmaniasis in India equipped it to face SARS-CoV-2, the virus that causes Covid-19.
The startup's idea was to retrofit one of its pilot products, a real-time detection face mask that not only protects the wearer and/or others but also contains an Artificial Intelligence (AI) transceiver that can aggregate particle proteins in the open air and send the data back to Rubix’s data platform. This real-time detection mask was originally developed to detect infectious disease outbreaks like Leishmaniasis, West Nile and Zika. The company reprogrammed this year to detect Covid-19.
“In March, we had only one Covid-related project,” said Reginald Swift, founder and CEO of Rubix LS. “Now, we have 15. In December last year, we were wondering if people understand what we do, and today we have sling-shotted that phase and are now talking about scaling up clinical trials.”
Rubix now works with companies that are part of Operation Warp Speed, the public–private partnership established by the US government to facilitate and accelerate the development, manufacturing and distribution of Covid-19 therapeutics and vaccines.
Ask and ye shall receive...later
What 2020 has done for health tech is partly that it has made health and wellness part of every conversation. As unpleasant and unfortunate as it is, it forced everyone to participate and pay attention to the healthcare experience.
In doing so, the challenge quickly morphed into an opportunity for some players, not only within the industry, but for their financial backers too. And companies found themselves, as Lipchin put it, “selling shovels during the Gold Rush.”
“We were struggling to raise funds,” said Lipchin. “And then Covid-19 hit, and we closed a [fundraising] round, and the money was in the bank within two days.”
Lipchin added that the decision to change his company’s business in a flash meant risking everything his company had worked for. But investors also were looking to de-risk their own portfolio of investments in the face of a looming recession.
“I told my investor, “We need each other, not because of good things, but bad things,’” Lipchin said.
His is not an unusual story.
Life sciences companies that applied for the US government’s Paycheck Protection Program went on to raise more capital than they were eligible for under the scheme. For instance, Boston-based biotech firm Biofourmis, which was approved to receive $770,000, went on to raise $100 million through private capital. It should be no surprise, then, that according to some estimates, 2020 is the largest funding year ever for American digital health startups – they raised more than $9 billion dollars, with deal sizes averaging $30 million.
This phenomenon has accelerated a medium-term goal (2-4 years) listed in WHO’s strategy: “develop research and promote capacity building for governments, policy-makers, practitioners and the public in general to take informed decisions, generate trust and support digital health investments.”
The National Institutes of Health has deployed more than $350 million since July to tackle Covid-19 testing as part of its Rapid Acceleration of Diagnostics initiative.
All this has been possible only with concerted effort and collaboration.
“What typically takes years has been achieved in less than 10 months,” said Dr. Madhvi Menon, a research fellow and immunologist at the University of Manchester in the United Kingdom. “This pandemic has shown us that if you have the resources and the right people with complementary expertise working towards the same goal, things can happen.”
Menon added that funding bodies and philanthropies are changing their strategies to encourage more global collaboration, with the pandemic forcing clinicians and scientists across the world to understand each other’s roles and cooperate towards achieving a common goal.
Menon, for example, is part of the Coronavirus Immune Response and Clinical Outcome consortium, which was set up to collect longitudinal samples from patients diagnosed with Covid-19, starting at hospital admission through to outcome. The consortium collaborates with PHOSP-COVID, a project that has researchers across the United Kingdom working together to understand and improve long-term health outcomes for patients who have been in hospital with confirmed or suspected Covid-19.
From private profits to progress for all
Still, the remarkable progress made by the medical community during the pandemic, from detection to inoculation, would mean little unless the resulting inventions are equitable and accessible to everyone everywhere. While private capital enables innovation to flourish, it often chases profits, a priority that at times is at loggerheads with developmental goals and sustainability.
As laid out in WHO’s strategy, digital-health technologies that are used appropriately should promote the protection of populations against, among other things, misinformation, exploitation, discrimination, and violations of data privacy and other human rights. Furthermore, their design and application must be inclusive.
The pandemic might pave the way in setting those standards too. India and South Africa submitted a landmark proposal to the World Trade Organization in October urging it to lower intellectual-property barriers that restrict access to Covid-19 medicines, tools, equipment and vaccines until most of the world is immune to the virus.
The campaign – No Patents, No Monopolies in a Pandemic – is an attempt to thwart pharmaceutical companies from profiting exorbitantly from lifesaving drugs in a way that makes the medications unobtainable for people who need them. While the overarching goal of the initiative is to provide equal and affordable access for all populations, the campaign also seeks to speed up discovery of treatment and to facilitate global scientific collaboration.
Ultimately, the idea is to make universal healthcare a public good. Similar to the pharmaceutical industry, today’s pioneers of digital health technologies will face the challenge of balancing the expectations of investors with growing global demands for equitable access to their innovations.